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Can a rise in interest rate slump the share market and vice versa?
When banks increases bank rates , savings is more attractive with higher interest rates and people tends to save money because of higher interest rates and spending is reduced thus resulting in less buying and less market share . A reduction in bank rates makes savings less attractive and borrowing more attractive which stimulate spending resulting in increased sales and market share
Rise in/down fall in bank interest causes a notable affect to the concerned countries share market, as when the bank's increases their interest rates it attracts more amount of savings and ultimately people save more and at the same time people also spend less causing low markets where as if taken vice-versa on reduced interest rates people save less causing high market share.
its the push and pull of currency in the market which controls the purchasing power of an individual. The push and pull of the currency in the market is checked by the government.
An increase of interest rate will help the money dearer.So loans already taken will cost more thereby reducing the protability of the companies. When the money becomes dearer, the companies will go for loans less, resulting in the slump in business .This will reduce the profitability of companies.So share value will go down.When there is decrease in interest rate , vice vetrsa will happen
The interest rate that impacts stocks. The interst rate that moves market is the the federal funds rate. Conversely, when it decreases the federal funds rare the Fed is increasing the money supply and, by making it cheaper to borrow, encouraging spending.
Changes in interest rates can significantly affect the different types of investments. The price of some stocks may decline as companies that pay more for their borrowings and commodities will make lower profits
